SAROGI CREDIT CORPORATION Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference under Section 256(1) of the Income-tax Act, 1961, (hereinafter referred to as "the Act"), in which a statement of the case has been submitted by the Income-tax Appellate Tribunal, Patna Bench (hereinafter referred to as "the Tribunal"), and the following questions have been referred to this court for opinion :

(2.) THE facts giving rise to this reference are short and simple. THE assessee is a registered-firm and derives income from financing purchase of trucks and other vehicles. During the examination of its books of account, the Income-tax Officer found certain cash credits in the names of two persons, namely, Shree Zahir Hussain and Shree Ram Swarup Saw. In the name of Shree Zahir Hussain there were two credit entries, dated the 24th July, 1961, and the 27th October, 1961, for Rs. 5,000 and Rs. 7,000, respectively. THE credit entry in the name of Shree Ram Swarup Saw was dated the 27th October, 1961, for a sum of Rs. 8,000. THE Income-tax Officer issued summonses under Section 131 of the Act to both the persons above-named, in whose favour the credit entries stood. Shree Zahir Hussain appeared before the Income-tax Officer and stated on oath that he invested the amount of Rs. 12,000 during the assessment year 1962-63 from out of his past income. Shree Ram Swarup Saw also appeared in person and stated on oath that he had also invested a sum of Rs. 8,000 out of his income of the past. It was further stated by both the creditors that they were income-tax assessees. THE Income-tax Officer disbelieved the statements on oath of the aforesaid two creditors. THE statement of Ram Swarup Saw was not accepted for the following reasons :

(3.) IT may be noticed from the facts of the Northern Bengal Jute Trading Company's case that the credit entries in question in that case were standing in the names of either employees of the assessee or an associate firm, Messrs. Surajmull Nagarmull. That being the position, it was held, on the facts of that case and the surrounding circumstances obtaining therein, that the initial onus had not been discharged by the assessee.